Stocks were down for most of the day, but losses were cut in
half on reports that President Obama would meet with Speaker
Boehner at the White House at 5 PM today.

In a post this morning, market guru
Ed Yardeni suggested postponing the fiscal cliff for a
year. He noted that the pace of government outlays were
slowing as receipts were picking up. He suggests it's
possible that economic growth on its own could close the
federal deficit.

Morgan Stanley's Global Economics team published their list
of
Macro Surprises for 2013 today. These scenarios
are not part of Morgan Stanley's base case assumptions, but
"depict plausible possible outcomes that would represent a
meaningful surprise to the prevailing consensus." Chief
U.S. economist Vincent Reinhart submitted his fiscal cliff
surprise: "US
over the cliff and likes it."

Initial weekly
jobless claims fell to 343k, which was lower than the 369k
expected by economists. This was down from last week's
reading of 370k. The four-week moving average fell to
381.5k. These were all welcome developments.

Inflation, as measured by the producer
price index fell 0.8 percent in November, which was more than
the 0.5 percent decline expected by economists. Excluding
food and energy, prices inflation climbed by just 0.1 percent,
which was right in line with expectations. These tame
inflation numbers are welcome news as the
Federal Reserve continues to extend its aggressive monetary
policy.